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title: [ARFC] Add rETH Aave v3 Optimism shortDescription: Add rETH to Aave v3 Optimism author: @Llamaxyz - @TokenLogic created: 2023-06-24

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Summary

Add rETH to Aave v3 Optimism as collateral and to the ETH correlated eMode.

Abstract

rETH is currently listed on Aave v3 Ethereum and Arbtirum. This publication proposes adding rETH to Aave v3 Optimism network.

ETH correlated asset make up over half of Aave's TVL on Optimism. By adding rETH and providing LST diversification, Aave presents itself as a neutral platform offering users the choice between various LSTs.

A Chainlink exchange rate oracle is now available and there is suitable liquidity across several DEX pools to support an rETH listing.

Motivation

rETH is listed on Aave v3 Ethereum and has over $58M of deposits. Rocket Pool is expanding its support for rETH across the L2 ecosystem and recently, a Chainlink oracle was published enabling rETH to be added to Aave Protocol. With the release of this oracle, this publication proposes adding rETH to Aave v3 on Optimism.

LST collateral types drive material borrowing revenue to Aave as users deposit the LST and borrow the corresponding network token. This is most evident on Ethereum where the LST-wETH-yield-maximising loop is the source of the vast majority of wETH borrowing demand.

An added benefit of offering a variety of LSTs is the respective communities may elect to compete for user acquisition via Aave through offering incentives. This is currently happening on Aave v3 Polygon and Aave’s TVL has meaningfully increased from a relatively small base.

Specification

Ticker: rETH

Contract Address: Optimism:0x9Bcef72be871e61ED4fBbc7630889beE758eb81D

rETH/ETH exchange rate: Optimism: 0x22F3727be377781d1579B7C9222382b21c9d1a8f

Parameter	Value
Isolation Mode	No
Borrowable	Yes
Collateral Enabled	Yes
Supply Cap	6,000 units
Borrow Cap	720 units
LTV	67.00%
LT	74.00%
Liquidation Bonus	7.50%
Liquidation Protocol Fee	10.00%
Reserve Factor	15.00%
Variable Base	0.00%
Variable Slope 1	7.00%
Variable Slope 2	300.00%
Uoptimal	45.00%
Stable Borrowing	Disabled
Stable Slope 1	13.00%
Stable Slope 2	300.00%
Base Stable Rate Offset	3.00%
Stable Rate Excess Offset	5.00%
Optimal Stable to Total Debt Ratio	20.00%
Flahloanable	Yes
Siloed Borrowing	No
Borrowed in Isolation	No

Optimism - Ethereum Correlated eMode Category

Add rETH to Category 1 eMode

Parameter	Value
Category	1 (ETH Correlated)
Assets	wstETH, wETH,rETH
Loan to Value	90.00%
Liquidation Threshold	93.00%
Liquidation Bonus	1.00%

Reference: https://governance.aave.com/t/arfc-optimism-create-eth-e-mode/13144

Copyright

Copyright and related rights waived via CC0.